Romanian Reform Efforts Progress Only Ploddingly

March 9, 1994

By Marc BallonSpecial to The Christian Science Monitor

BUCHAREST, ROMANIA

WHILE Hungary, Poland, and the Czech Republic move toward integration with the West, Romania - battered by high inflation, rising unemployment, and falling wages - is struggling to feed, clothe, and house its own people.

The Romanian government, which includes many cronies of the late dictator Nicolae Ceausecu, promises to accelerate a process of privatization and embrace other market reforms.

``I think Romania will become the success story in [Eastern] Europe over the next few years after we pass through this difficult ... transition,'' says parliamentary deputy Adrian Nasase, head of the ruling Party of Social Democracy.

Tight monetary policies have begun to tame inflation. Higher interest rates and increased reserve requirements enacted by the central bank last October have lowered the annual inflation rate to about 100 percent, according to Dan Pascariu, chairman of the Romanian Bank of Foreign Trade. In 1993, inflation neared 300 percent.

President Ion Iliescu's government has eliminated subsidies on consumer goods and plans to restructure or close inefficient state-owned companies, Mr. Pascariu says. ``My personal opinion is that we have bottomed out.''

Some economic indicators support this view. Overall gross domestic product grew by 1 percent last year, compared with a 15 percent drop in 1992, according to the National Statistics Commission. Agricultural production jumped 12.4 percent, testimony to the successful government policy of returning farmland to its original owners.

International agencies and foreign governments have rewarded Romania's good-faith efforts. The country recently became an associate member of the European Union, the first step toward full membership. It inked an agreement with the International Monetary Fund that could free up to $700 million in badly needed loans over the next 18 months, provided it speeds up privatization and liberalizes the exchange rate. The United States agreed last year to pump $50 million into Romania for private-sector investment, and to renew the country's most-favored-nation trade status.

But despite these positive trends, Romanians continue to suffer. Unemployment, now at 10 percent, is expected to leap dramatically with large-scale privatization and restructuring. Real wages have dropped by about 45 percent since 1989. The average monthly salary is $60, about one-third the Czech level.

``Under Ceausescu, we had enough to eat but no freedom. Now, we have freedom but not enough to eat,'' says Aurelian Manea, a Bucharest taxi driver. Indeed, long lines for bread still snake out of some stores. Markets generally sell stewed fruits, pickled vegetables, and goat cheese, but little else.

More worrisome is the government's commitment to free markets, says Christian Suicu, foreign editor of the popular Bucharest daily Romania Libera. The ruling party will jettison economic reform as soon as unemployment jumps and its popularity falls, he says. Romania will likely fall further behind the West and find itself, along with Bulgaria, relegated to Europe's ``second-teir.''

``The only ones benefiting from the market economy are members of the old regime,'' adds parliamentary deputy Nicolae Ionescu-Galbeni of the opposition National Peasant Christian Democratic Party.